USD/JPY sinks to lows near 114.60

The greenback has given away its initial gains vs. its Japanese counterpart on Tuesday, relegating USD/JPY to the lower bound of the range in the 114.65/60 band.

USD/JPY weaker as US yields drop

Spot met increasing selling pressure as yields in the US money markets keep correcting lower early in the NA session.

In fact, the 10-year benchmark has now deflated to the area of daily lows around 2.60%/2.59%, coming down from YTD peaks near 2.63% seen during early trade.

Expectations - via higher US yields - of a rate hike at the FOMC meeting on Wednesday have been the exclusive driver behind the pair’s up move in recent weeks, although the bull run failed around Friday’s tops in the mid-115.00s.

However, spot is reflecting investors’ increasing cautiousness ahead of the FOMC meeting, with the focus of attention now shifting to the ‘dots plot’ in detriment of a 25 bp hike, which seems to be fully priced in by now.

USD/JPY levels to consider

As of writing the pair is retreating 0.21% at 114.64 facing the initial support at 114.46 (high Mar.13) ahead of 114.23 (55-day sma) and finally 113.58 (low Mar.8). On the flip side, a break above 115.51 (high Mar.10) would aim for 115.62 (high Jan.19) and then 115.92 (61.8% Fibo of the 2017 drop).

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